British prime minister David Cameron's former press aide is to be arrested over the phone-hacking crisis which has plunged Rupert Murdoch's media empire into chaos, the Guardian is reporting.

Police told Andy Coulson he was to be detained on Friday (UK time) over claims he knew News of the World journalists and private detectives on the paper's payroll were hacking phones of public figures while he was editor, the Guardian said.

According to the report, Mr Coulson has been asked to report to police for questioning, after which he was expected to be released on bail.

News of the imminent arrest broke hours after mogul Rupert Murdoch killed off the News of the World in a shock move aimed at limiting the damage to his News International stable caused by the snowballing crisis.

Officers working on Operation Weeting brought forward the arrest over fears News International was to leak more evidence to the press following Tuesday's revelations Mr Coulson had apparently authorised payments to police for stories.

The 168-year-old paper will print its last edition on Sunday after claims it hacked the phones of a murdered girl and the families of dead soldiers along with a host of celebrities and politicians.

Mr Coulson became the paper's editor in 2003 but resigned in 2007 after royal editor Clive Goodman and private investigator Glenn Mulcaire were jailed for hacking phones belonging to members of the royal household.

Mr Coulson was hired by then opposition leader Mr Cameron as a media aide and became the coalition government's communications chief following their election victory in 2010.

But he resigned in January, saying sustained speculation over his time at the News of the World was detracting from his work.